🚀 My Q4 Watchlist

Hi everyone!

Crazy to think we’ve already made it through three entire quarters of 2023 — bank crises and all. It’s been quite the year to reflect upon.

With that being said, there’s much to prepare for.

Sure — dollar cost averaging into fundamentally sound businesses is the name of the game, but it’s also important to have a short list of new names handy in case we experience continued volatility.

Said volatility might give us an opportunity to own incredible businesses at fair prices.

In this post, we’ll cover:

• Various names I’m excited about at the moment

• An update on my Tesla covered call passive income strategy

👉 Various Names I’m Excited About

To kick off this section, I wanted to share some updated thoughts on the Magnificent Seven — Apple, Alphabet, Amazon, Meta, Microsoft, Nvidia, and Tesla.

These names, since the end of September, are up +81% as shown above.

For comparison, the S&P 500 was up +12% during the same period of time — while the equal-weight S&P 500 was actually down -0.2%.

Simply put, Mega Cap technology stocks are “carrying to team” at the moment. Considering the S&P 500 is market-cap weighted, these seven stocks make up nearly 28% of the index — so of course they’re the ones responsible for the double-digit rise.

For us, this is good news.

As you all might remember, my “Long Technology” section of the portfolio is dedicated to these Mega Cap technology companies (shown below). The weighting of this section is a healthy 35% — allowing me to have outperformed the S&P 500 by several percentage points.

Looking forward, I have no intention of trimming any of these positions — if anything I’d swap out the losing ASML Holdings position for Nvidia.

I don’t think so — I believe they should be integral pillars of most retail investor portfolios.

Over the last month or so we’ve seen a contraction in the markets — with the “S&P 493” experiencing multiple compression from 18x price-to-earnings to 16x. Whereas the “Magnificent Seven” experienced 34x price-to-earnings to 27x.

And according to this chart above provided by Goldman Sachs, Mega-Cap Tech in relation to rest of the stock market is slightly “undervalued.” Considering many of these name have reported and will continue to report their quarterly earnings results over the coming week or two — I’ll be buying any weakness.

⚡️ Cryptocurrency

Continuing on this “Various Names I’m Excited About” theme — cryptocurrency remains the top of my list.

As my Founding Members know from our livestream on September 11th, I continue to believe Bitcoin is one of the best risk / reward opportunity in the market today.

Sure, the cryptocurrency is up +105% YTD (shoutout to everyone who’s been buying with me this year) — but the price has risen by +35% since our mid-September livestream and up +50% since we started accumulating in February.

Below is an interesting pricing model I found on Twitter that essentially says “Bitcoin finds a price ‘top’ and ‘bottom’ plus or minus 21 days before or after November 28th every 4 years.”

This particular model predicts a market top somewhere around November 2025 at ~$140K / Bitcoin — obviously I’m not claiming this model is correct or will at all predict the future, but I like the risk / reward here and will continue to accumulate Bitcoin, Ethereum, and Chainlink into 2024.

⚡️ Stocks & ETFs

Just so we’re all on the same page, the stock market (S&P 500 & the Nasdaq) is inherently bearish at the moment — having now closed below it’s 200-day moving average, the long-term “sell and go away” technical signal.

The above illustration demonstrates just that — percent of time spent below the 200-day moving average compared to the time spent above it. While we’re in times of expansion, we’re above it. While we’re in times of recession, we’re below it.

And to make matters worse, the equal-weight S&P 500 (forgetting about the immense run up the Magnificent Seven have had this year) is almost -6% below the 200-day moving average — the most over the last 12 months.

And just one more image for you — showing how the 200-day moving average always acts as a “bullish” or “bearish” barometer. When we’re above it, life is good. When we’re below it, not so much.

Nothing changes unless you plan to retire in less than 5 years — which isn’t my personal reality. I’m going to continue to dollar cost average into incredible businesses trading at fair prices. I think the only thing I’ll be changing is just how much I’m going to begin to optimize for income.

For example, the NEOS S&P 500 High Income ETF (SPYI) pays a 12% annual distribution yield to their investors — which means if the price of the ETF declines by -6% over the next 12-months, I’ll still be up +6% in total return when you consider the distribution yield.

As you all know, this is the largest dividend-focused holding in my portfolio and that’s going to continue (and expand even larger) as we experience uncertainty.

Names I continue to be excited about are as follows:

• Broadcom (AVGO) — Katie Stockton and I chatted about this one during our webinar the other week. Their AI-specific revenue is forecasted to grow to become 25% of total revenue in 2025 (currently less than 10%).

• Shopify (SHOP) — another name Katie Stockton and I covered during our webinar. They’re flipping free cash flow positive this year and next — from -$440M in 2022 to +$875M in 2024.

• Crowdstrike (CRWD) — the company’s Falcon platform is an industry-leading, AI-powered money printing machine. Cyber threats are only going to increase over the coming decade and I firmly believe CRWD will lead the charge in preventing + overcoming said threats and breaches.

• Snowflake (SNOW) — cloud-based data warehousing solution that will continue to benefit from the ongoing shift to cloud computing. Their shared-data architecture enables real-time access and analytics.

• Tesla (TSLA) — this one speaks for itself. Their ever-expanding charging network, global Gigafactories, Dojo program, energy storage, solar, etc. will continue to drive shareholder value over the long-term.

• Amazon (AMZN) — as shared here, this company is entering a “earning growth story” that should propel the stock much higher over time. I’m buying any weakness.

• Palo Alto Networks (PANW) — the “OG” cybersecurity company. They’re continuing to innovate in a growing field — unlocking immense shareholder value along the way.

• Celsius Holdings (CELH) — this energy drink company continues to fire on all cylinders with immense upside potential given their international expansion roadmap.

• US Treasuries — as you all know, T-Bills are paying 5.5% right now. Holding cash, especially in this high interest rate environment, is absolutely a strategy to take into 2024. I plan to follow the steps I shared in this post to capture that yield.

These are just a few of the ways I’ll continue to deploy capital into 2024 — optimizing for income through SPYI, cryptocurrency (Bitcoin, Chainlink, and Ethereum), as well as growing businesses operating in secular growth trends.

👉 Tesla Covered Call Update

As I’m sure you all remember from this post, I’ve been selling covered call option contracts against my 100 shares of Tesla stock to generate passive income. I started doing this on September 11th, so about 6 weeks ago.

⚡️ The Upside

In that short period of time, I’ve been able to generate $3,118 of premium income — I’ve used this money to invest into other assets that I believe will continue to appreciate in value. However, other investors have used this money to simply supplement their income.

Since starting this covered call “journey,” I’ve been able to generate a 11.9% “cash on cash” return against my $26,275 originally invested. This was achieved in only 6 weeks!

My goal is to continue to write covered call option contracts against my shares for the foreseeable future. Assuming I’m able to continue generate ~$3,000 in income every 6 weeks, I’ll generate ~$24,000 per year — allowing me to collect back my entire original investment over just ~14 months.

Depending on the price of Tesla stock in Q1 of 2024, I might buy 100 more shares to increase the passive income from ~$3,000 every 6 weeks to instead ~$6,000 — stay tuned.

⚡️ The Downside

Shares of Tesla stock have decreased in value since I purchased them. You might be saying “Haha! Dude you’ve lost like $5K in value, you’re in the red.” But, that’s not how I’m thinking about this at all.

Sure, if someone forced me to sell all 100 shares of my stock tomorrow morning — yes, I’d have lost about $2,000 on this idea. However, that’s not my reality.

My reality is I plan to own all 100 shares of Tesla well into 2024, 2025, and so on. I firmly believe in the future of this amazing company and am eager to profit from their innovation in the future.

And if I’m able to make back all of my original investment while simultaneously owning stock in Tesla — I’m happy.

Buckle your seatbelts — especially if you’re a frequent trader. The stock market (and likely the economy) are in for a bumpy 2024. Don’t forget, leave yourself wiggle room in your budget to save and pay-off high interest consumer debt.

The peace of mind knowing you’ll be just fine in case of a mild to severe recession because you’re out of debt and have an emergency fund is invaluable.

Personal finance > investing.

Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.